Cancellation reversal causes insurer headaches

Nov. 16, 2013
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Dean and Mary Lou Griffin of Chadds Ford, Pa., liked the health insurance they purchased for themselves three years ago and thought they would be able to keep it. But they recently received a letter saying the plan was being canceled because it didn't cover certain benefits required under the new law. Now they may be able to keep it after all. / Matt Rourke, AP

by Jayne O'Donnell, USA TODAY

by Jayne O'Donnell, USA TODAY

Consumers are hounding their insurance agents with questions about whether and when they can get their canceled insurance policies back, now that President Obama says it's OK.

But those agents have few answers. They are still waiting for clarification from insurers, who are awaiting word from their state insurance commissioners and even the White House.

The CEOs of major insurers including Cigna, Aetna and Humana, met with President Obama on Friday but left without talking to reporters about what will happen to plans that didn't meet the requirements of the Affordable Care Act. Meanwhile, the insurance commissioners for Vermont, Georgia and Washington state were among those saying they won't allow reinstatement of canceled policies.

"We've been advising our members to tell clients to sit back and wait as developments unfold over the next few days," says Jessica Waltham, senior vice president of government relations at the National Association of Health Underwriters, which represents insurance agents.

State insurance commissioners, the White House and the Department of Health and Human Services will need to provide "details as to how they would move this policy forward," she says.

"It's been non-stop since this whole thing started (Thursday)," says John Young, director of sales at Flexible Benefit Service Corp. in Rosemont, Ill. "Everyone wants to know what effect the president's message will have and, at this point, we just don't know until the insurance commissioner advises the carrier about what they'll allow."

Young, whose company handles group insurance policies and acts as a broker for about 1,000 insurance agents, was on a conference call Friday with Blue Cross Blue Shield of Illinois that offered few answers.

John DeGruttola, senior vice president of marketing and sales for insurer Optima Health, says reverting plans "is going to be very difficult to administer."

"We went forward with the intent that this was the law of the land," says DeGruttola, whose company only sells insurance in Virginia. "Nobody was focused on the existing plans. They were not filed (with the insurance commissioner) nor were they approved."

Although many state insurance commissioners had already allowed insurers to extend their plans into 2014 to allow consumers more time to make decisions, the Illinois insurance commissioner did not. Young says many agents have already put consumers into pricier new plans, but it "might be difficult to get a refund from the carrier."

"A lot has already been done" to switch people to new plans that comply with the ACA, Young says. Now, "there's incredible confusion" for those consumers about what to do.

Among the other details that remain to be worked out: which insurers and insurance commissioners will OK the old policies now, whether insurers are allowed to raise the prices on the canceled policies and whether there will be additional financial help for insurers now dealing with more potential financial risk.

In Pleasant HIll, Calif., broker Colleen Callahan says she had been "steadily preparing comparisons and reviews" that are customized for consumers to help them plan for the new year. It's a "big project and it takes us quite a bit of time to prepare and present, either in person or by e-mail first, followed up by a telephone call or an in-person meeting," she says.

"The confusion now is that those currently insured are not sure of the next step. Do they have to make a change or can they keep their current plan?" Callahan says. "In some cases, the premiums on the existing plans might be better and in some cases the new plan premiums might be better. It is all case-by-case."